3/05/2001 @ 12:01AM

Voice-Over-DSL: The Next Big Thing

While wireless technology is grabbing lots of attention, the hardwired old-fashioned phone companies are waiting to offer a new service that cannot be matched. Look out for voice-over-DSL, the ability to make a phone call over a digital subscriber line. The technology could also prove to be a boon for equipment makers 3Com, Lucent Technologies and Nortel Networks.

Over the years, some subtle but important trends have unfolded involving the old-fashioned hard-wired phone system. One was development of a high-speed networking technology called asynchronous transfer mode (ATM). Most, if not all, of the giant high-speed high-capacity fiber-optic networks have ATM gear. Another development was a technology called IP telephony that bypasses giant phone switches. IP referred to Internet protocol, whereby a phone call could be routed as data from one phone to another based on the way computers talk to each other with specific IP addresses–the network equivalent of a phone number. Its advantage: a much less expensive way to do things.

Over the years, the committees that make standards for ATM networks developed so-called adaption layers, which are like special envelopes that move data around to optimize the network. Recently the phone companies and the DSL equipment makers got very excited over ATM adaption layer number 2, or AAL-2. It utilizes yet another emerging technology called voice-over-DSL (VoDSL) that allows a user to take advantage of the bandwidth of DSL to make multiple analog phone calls. The goal is to do this with a regular phone calling a regular phone number over a DSL modem. IP telephony is part of the whole scheme, as is the ATM network and the plain old telephone system. It’s a love triangle.

Here’s one way it will appear. The next generation of DSL services will come with a DSL modem that will have a built-in phone jack that can be networked to perhaps a dozen or more phones. Use of this new port will cost an additional fee, but the services such as caller ID, call waiting, conferencing, forwarding, multiple call waiting and call re-routing by number, added to the DSL service, will appeal to many small businesses and some individuals.

The additional port will run data down the same DSL line, but signal the phone company’s system using the AAL-2 protocols. This will tell the network that it is a voice call coming from that channel. The AAL-2 mechanism will shunt the data out of the DSL access multiplexer–the device that hooks your service to the Internet and to the phone system at the central office–and pump it into the standard switched phone system where it will be treated like a regular phone call with the rights and privileges of phone dialup system. You can dial a normal number anywhere in the world. Furthermore the AAL-2 data stream will be given a special quality-of-service status, making it act like an analog voice call. No bad calls or drop-outs.

By running through the switched phone system, the call can then be metered like a regular phone call and the user charged for it. Aggressive pricing could make this very attractive. Thus, with two-wire DSL line running at, say, 1.5 megabits per second, it would be possible to easily run 20 or more phone lines and have enough bandwidth left over for normal Internet browsing. The phone lines could be instantly “turned on” as needed by the phone company.

An Atlanta-based competitive local exchange carrier,
Edge Connections
, has begun offering this service in Atlanta, New York City, Washington, D.C., and Boston. This company will set the stage for future pricing.

Most companies poised to profit from this emerging technology are privately held. They include startups
Jetstream
and
CopperCom
.

Unfortunately for the smaller players,
Cisco Systems
and 3Com
both have their eyes on this market, with Cisco quite on top of the AAL-2 scheme. And 3Com dominates the market for networked phones with its recent acquisition of NBX. Combined with its Commworks division, there is no reason 3Com can’t be a dominant VoDSL player in the small business arena.

If that’s not bad enough news for the small players, add Lucent
and Nortel
. Lucent has a division called AG Communications which specializes in similar gear, as does Nortel. Both these companies also sell the big phone-company gear and should have a distinct edge in this new market.

You’ll begin to see these services emerge nationwide over the next year. The big old-fashioned phone network is far from dead.

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